Short-Term Solution

Realtors' group wants out of vacation rental regs authored by Sen. Mike McGuire

A level playing field? SB 593 aims to to tighten regulations on short-term rentals like Airbnb.

The state's powerful California Association of Realtors has weighed in on a bill that would regulate the state's booming short-term vacation rental market. The group has pushed lawmakers to amend SB 593 so that it doesn't affect its members—but the lobbying organization won't commit to support the bill if that's done.

State Sen. Mike McGuire's bill to regulate the online vacation-rental industry has picked up numerous supporters as it has wended through the California legislature this spring.

Groups and businesses ranging from the AIDS Housing Alliance to the Service Employees International Union have signed on to the bill, which would regulate the short-term vacation rental industry through new state reporting requirements placed on online rental platforms like Airbnb.

The real estate group has been slow to get on board, and has danced around the issue of whether it supports the bill with amendments or will oppose the bill unless it is amended to their liking.

"We oppose unless amended and will be neutral once the amendments are in print," says the group in a statement.

The point is the same despite the hedging over language: the group wants "to exempt real estate licensees from the definition of 'hosting platform' as defined by the bill," says a spokesperson via email.

In plain English, that means the real estate group won't oppose the McGuire bill if its members are excluded from its reach.

Under the McGuire bill, Airbnb and other online rental sites would be compelled to provide the state the address of a listing, how many times it has been rented and for how much per night. The bill also provides language for municipalities that prohibit short-term vacation rentals to enforce the ban.

A major driver behind the bill is that it would level the playing field so that transient occupancy taxes (TOT) paid by hotels and other established short-term rental outfits would now be collected from anyone who uses sites like Airbnb, HomeAway and VRBO to list a property.

"Home-sharing is here to stay," says McGuire, "and what this bill does is provide cities and counties with what they need to enforce the local laws on the books. "

The Realtor's group is the lobbying arm for the state's real estate industry, which has leapt at the short-term rental opportunities afforded by the sharing economy and platforms such as Airbnb.

In an interview with the Bohemian earlier this year, a spokesperson said the organization had not taken a position on the McGuire bill, and that "is not something that we are looking at."

They've apparently looked at the bill and now say it will oppose SB 593 unless amended to their liking.

But, McGuire says that "they are actually in support of the bill. They want equity."

So what gives?

McGuire notes that many Realtors already pay TOT and are licensed through the state. "Right now, if you have a Realtor's license in the state of California," he says, "you have to abide by the law and that includes paying your taxes. Per the terms of their license, they have to follow federal, state and local laws."

The amendment sought by the Realtor's association has to be added to the bill by June 5, and McGuire will file it, he says.

Airbnb opposes the bill on privacy grounds: it doesn't want to hand its customers' information over to the state without a big fight over privacy concerns.

"This proposal could force internet platforms like Airbnb to hand over broad swaths of confidential, personal information to bureaucrats," reads a company statement. "We look forward to continuing the conversation with the committee, but proposals like SB 593 wrongly disregard consumer privacy."

Airbnb did not respond to requests for additional comment. McGuire says the privacy concern is a "smokescreen" and that anyone who uses the Airbnb platform has already signed their privacy away via the company's terms of agreement.

The real estate industry likes the short-term rental market. A recent story in the national trade publication Realtor Magazine, for example, noted that "sites like Airbnb and VRBO can be good places for agents to 'park' a property and earn income while a market rebounds or a buyer surfaces." The magazine says that the HomeAway platform offers some 350,000 listings from realtors.

The Realtors' association also likes Mike McGuire. According to online records, the CAR contributed $16,750 to McGuire's campaign through September of last year. That figure easily puts it in the top tier of contributors to the Healdsburg-based freshman senator.

McGuire says the genesis for his bill can be found in his four-year stint as a Sonoma County supervisor. During that time, he says the majority of complaints his office heard about short-term vacation rentals came from properties where there was an absentee landlord. Most of those, he says, were second homes rented out by their absent owners. McGuire says he never heard complaints about properties that were being managed by realtors or property-management firms.

"What you have are a lot of individuals in the Bay Area who are buying a second home and then renting them out to either large numbers of individuals, or there are loud, rowdy parties, and that has changed the look and feel of our local neighborhoods," he says. "Those homes that actually have a property management firm associated with it, we're not hearing a lot from the neighbors because those properties are properly managed."

But what's good in Sonoma County is not necessarily good in urban areas where the vacation-rental economy has pushed affordable housing aside in favor of profit and tourism.

Airbnb recently removed numerous properties from its Los Angeles listings managed by property-management firms, given that many of those properties had previously housed long-term residents.

"Property management companies have been purchasing hundreds of units and placing them on online vacation rental platforms," says McGuire by way of agreement. "In cities where this is happening, it's caused big problems."

In Los Angeles, "Airbnb decided that they didn't want property managers on the platform," says Ian McHenry, president of Beyond Pricing, a San Francisco firm that provides price-shopping software for consumers who use short-term vacation rental sites. "That's a bit scary for the property manager, that they can just cancel the reservation."

McHenry notes that short-term rental platforms like Airbnb are concerned about the McGuire bill because it creates a state tax regime ahead of a locality or city having fully grappled with the vacation-rental boom in its midst.

He agrees with the emphasis in McGuire's bill on TOT accountability, but notes, "The worry from Airbnb and VRBO is, 'don't tax ahead of legitimizing us,'" he says. The fear, he says, is that the very data collected by Airbnb on behalf of the state could then be used to stand-up local efforts to get rid of Airbnb.

"People are worried that the information is going to be used against them," he says.